LONDON MARKET MIDDAY: Stocks Rise; Investors Look Ahead To US Jobs

(Alliance News) - Stocks in London were higher at midday on Friday amid optimism over the easing of lockdown measures, massive stimulus and signs the worst of the global economic downturn may be over.

The FTSE 100 index was up 59.89 points, or 1.0%, at 6,400.72 on Friday. Since the week began, the blue-chip index is up 2.9%.

The mid-cap FTSE 250 index was up 259.44 points, or 1.5% at 18,079.97, and the AIM All-Share index was up 0.4% at 900.37.

The Cboe UK 100 index was 1.0% higher at 10,835.09. The Cboe 250 was up 1.5% at 15,595.22, and the Cboe Small Companies up 1.3% at 9,739.66.

In Paris the CAC 40 was up 1.8%, while the DAX 30 in Frankfurt was up 1.4%.

Analysts at IG Group said: "Another day of gains looks to be taking shape in Europe, with the value theme seen throughout the week maintained despite the significant headwinds that lie ahead. Traders have got very used to the idea of markets being far removed from the stark reality of economic decline. Today looks set to be a perfect example of that, with markets on the rise despite predictions of a 20% unemployment rate in the US.

"With the Fed continuing to load up on billions of dollars' worth of assets every day, this crisis has been characterised by the swiftness of central bank and government support. In a week of sharp gains, there would ordinarily be a bout of profit-taking given the risk of a market reversal."

On the London Stock Exchange, travel stocks were among the blue-chip risers, with International Consolidated Airlines, up 9.5%, Carnival, up 9.1% and easyJet up 6.6%.

"Airlines and travel companies are performing well this morning as there is continued optimism about the tourism sector reopening. As the holiday season approaches, a number of airlines have mapped out plans to ramp up the number of flights they are offering," said CMC Markets analyst David Madden.

Taylor Wimpey was up 3.6% after the housebuilder said it is progressing construction on a majority of its sites across England and Wales, with Scottish sites now also starting preparation for a return to construction.

Total completions - including joint ventures - in the 22 weeks to the end of May were 2,455, down close to 40% compared to 4,052 a year earlier, reflecting the impact of site closures, Taylor Wimpey said.

Looking ahead, Taylor Wimpey said its order book remains "strong", with a healthy increase in reservations made in recent weeks. The UK order book has continued to increase. As at week ending May 31 its total value stood at GBP2.78 billion versus GBP2.52 billion the year before.

The pound was quoted at USD1.2629 at midday, up from USD1.2592 at the London equities close on Thursday, with optimism stemming from an improvement in economic recovery and coronavirus related figures.

The euro stood at USD1.1334 at midday, flat from USD1.1333 at the European equities close Thursday.

Against the yen, the dollar was trading at JPY109.22, up from JPY108.98 late Thursday.

Stocks in New York look set to open sharply higher as violent protests around the US ease and more businesses begin to reopen.

The DJIA is called up 0.7%, the S&P 500 index up 0.3% and the Nasdaq Composite up 1.1%.

In addition, investors are looking ahead to the closely watched US jobs report for May, due at 1330 BST, which is expected to show the country is facing its highest rate of unemployment since the Great Depression.

US nonfarm payrolls are expected to fall by 8 million in May, while the unemployment rate is predicted to soar to 19.8% in May from 14.7% in April.

AxiCorp's Stephen Innes said: "It will be hard for the US employment report for May...to shock markets, given the nonplussed reaction to recent labour market data.

"Still, the sticker shock of near-20% unemployment suggests US equities may need a rapid recovery in the critical job metrics to justify these elevated levels, let alone for stock markets to punch higher."

Brent oil was quoted at USD41.02 a barrel at midday, up sharply from USD39.28 at the London equities close Thursday, on rising odds of an OPEC+ extension. Oil rose past USD40 per barrel three months after oil prices plunged to reach the worst level since the Second Gulf War.

The Organization of the Petroleum Exporting Countries and allied oil producers are scheduled to conduct negotiations on Saturday, Russia's Energy Ministry and sources in Vienna said.

"Oil was near the highs with WTI above USD38 and Brent (Aug) above USD40.50 as OPEC brings its off-again, on-again meeting forward from June 9 to June 6 - at least that is the current understanding. At various stages this week it's been taking place yesterday, next week and not at all. Russia and Saudi Arabia want to get this extension over the line before the start of the new trading week. The meeting taking place on a Saturday does raise the prospect of a gap open on Sunday night," said Markets.com analyst Neil Wilson.

Gold was quoted at USD1,705.75 an ounce at midday, down from USD1,713.66 late Thursday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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